Thomas Cook has received an offer for its northern European business from a private equity investor, as the tour operator fights for survival under the weight of large debts and difficult trading in the UK.
The company said in a statement to the stock market on Thursday it had received a “highly preliminary and unsolicited indicative offer” from Triton Partners. Triton, which mainly invests in northern European countries, bought the Dutch-Swiss travel company Sunweb Group in December.
The buyout firm has targeted Thomas Cook’s tour operator and airline in Norway, Sweden, Finland and Denmark. Those operations are thought to have made annual earnings before interest and tax of around £120m in 2018, from £1.3bn in revenues.
Thomas Cook, which traces its heritage to 1841, has struggled in recent months, with investors questioning whether it can survive a £1.2bn debt burden amid tough trading conditions including Brexit-related weakness in the UK. Thomas Cook also runs tours in continental Europe, as well as a profitable airline across much of Europe.
The company reported a £1.5bn loss in the first half of its financial year, which it blamed partly on British customers’ unwillingness to book holidays because of Brexit uncertainty.
Stock in the company, once listed on the FTSE 100 index, has fallen by more than 90% since 16 May 2018 as investors question whether the company can survive. Shares fell by 40% last Friday after an investment bank analyst said they were worthless.
Shares rose by 2% on Thursday to 12.47p, but the company faced renewed pressure after the credit rating agencies Fitch and S&P downgraded their ratings further into “junk” territory. Rating agency downgrades can make debt repayments more expensive.
Thomas Cook has already received multiple bids for the whole and parts of its airline, it said. The German flag-carrier Lufthansa has put in an offer for Condor, its German airline, while Virgin Atlantic is reportedly interested in its long-haul business. This month Thomas Cook said it had agreed a £300m credit lifeline with banks, although access to the money was contingent on progress in the sale of the airline.
A sale of parts of the business could provide the company with much-needed cash to service its growing debt pile.
In its statement, Thomas Cook said: “The group is currently evaluating this offer alongside the ongoing strategic review of its group airline, announced in February 2019. There can be no certainty that a transaction will be concluded with Triton Partners.”
Triton Partners declined to comment.
